The Federal Government has released exposure drafts of the amended Australian Consumer Law legislation, and gave the community a chance to make submissions about the proposed raft of changes. After these submissions are considered, a final version of the draft legislation will be voted on by Parliament.

The exposure drafts are a consequence of the Consumer Affairs Minister's commitment to a package of 14 legislative reforms to the legislation in August 2017. The purpose of the reforms is to make the Australian Consumer Law:

more clear;

easier to enforce; and

applicable to a broader range of companies and commercial transactions.

Hypothetical: What Would Change If The Exposure Drafts Became Law

If the current exposure drafts became the new Australian Consumer Law, the following would change:

Publicly listed companies that purchase goods and services from Australian businesses would be protected by the unconscionable conduct provisions of the Australian Consumer Law.

Currently, there is an exception that precludes publicly listed companies from relying on these provisions. The original rationale was that these companies are better-resourced, more sophisticated and enjoy better bargaining power than the average consumer and so were adequately able to protect their own interests.

It will be clear that any person engaged in trade or commerce, who takes corrective action to 'mitigate safety risks of the consumer goods, which may include action taken to remove the consumer goods from distribution, sale or consumption' will have engaged in a 'recall' under the Australian Consumer Law. If a person engaged in a recall fails to meet any mandatory notification obligations under the legislation, they may be required to pay much higher penalties - in particular, $33,000 for individuals, and the greater of $165,000 or three times of the benefit obtained for companies.

Currently, a person who voluntarily recalls a consumer good must make certain notifications, but the term 'recall' is not defined and so the circumstances in which this obligation arises can be unclear.

It will be clear that the definition of 'unsolicited services’ under the Australian Consumer Law extends to unsolicited sales that occur in a public place (eg a shopping centre) or at the consumer's place of residence.

This is the intended operation of this definition, but is not explicitly stated in the current definition.

It will also be clear that the definition of 'unsolicited services' under the Australian Consumer Law extends to unsolicited services which are purported to have been supplied but have not been supplied. The false billing provisions under the Australian Consumer Law will apply to such conduct.

The current definition is limited to services which were supplied but not requested by a person.

The Australian Competition and Consumer Commission(ACCC) will be able to require third parties involved with the supply of potentially unsafe goods and services to disclose the information and documents they hold about those goods and services. For example, safety testing facilities.

Currently, the ACCC can only require the supplier to provide such information and documents.

The ACCC and the Australian Securities and Investments Commission (ASIC) will have the power to investigate possible unfair contract terms.

Currently, the ASIC and the ASIC do not have such powers.

Single prices will have to include any fees or charges payable for pre-selected or not de-selected optional extras in the headline price.

Currently, these do not have to be included in the total price until the point in time that the vendor finalises the purchase.

It will be clear that the consumer guarantee exemption for the transport or storage of goods will only apply where both the consignor and the consignee are a business.

This is the intended operation of the current legislation, but has been the subject of some confusion in the past.

The prescribed mandatory text for warranties against defects under the Australian Consumer Law will extend to services as well as goods.

Currently, the prescribed wording only refers to goods.

Will this affect your business?

No one can say at this point what the final version of the draft legislation will be, and whether it will pass without further amendment. That said, it is prudent for businesses operating in Australia to consider what would happen if the current exposure drafts became the law.

To find out more about how these changes could affect your business operations, contact Jessica Kinny.

This blog post does not constitute legal advice and should not be relied upon as such. It is a general commentary on matters that may be of interest to you. Formal legal or other professional advice should be sought before acting or relying on any matter arising from this communication.